Correlation Between Swift Haulage and Eco World

Can any of the company-specific risk be diversified away by investing in both Swift Haulage and Eco World at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Swift Haulage and Eco World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Swift Haulage Bhd and Eco World Develop, you can compare the effects of market volatilities on Swift Haulage and Eco World and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Swift Haulage with a short position of Eco World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swift Haulage and Eco World.

Diversification Opportunities for Swift Haulage and Eco World

0.14

Correlation Coefficient

Swift Haulage  Eco World

Average diversification

The 3 months correlation between Swift and Eco is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Swift Haulage Bhd and Eco World Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco World Develop and Swift Haulage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Swift Haulage Bhd are associated (or correlated) with Eco World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco World Develop has no effect on the direction of Swift Haulage i.e., Swift Haulage and Eco World go up and down completely randomly.

Pair Corralation between Swift Haulage and Eco World

Assuming the 90 days trading horizon Swift Haulage Bhd is expected to under-perform the Eco World. But the stock apears to be less risky and, when comparing its historical volatility, Swift Haulage Bhd is 1.57 times less risky than Eco World. The stock trades about -0.06 of its potential returns per unit of risk. The Eco World Develop is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  211.00  in Eco World Develop on December 30, 2024 and sell it today you would lose (14.00) from holding Eco World Develop or give up 6.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Swift Haulage Bhd  vs.  Eco World Develop

Swift Haulage Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swift Haulage Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Eco World Develop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco World Develop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Eco World is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Swift Haulage and Eco World

The main advantage of trading using opposite Swift Haulage and Eco World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swift Haulage position performs unexpectedly, Eco World can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eco World will offset losses from the drop in Eco World's long position.

The idea behind Swift Haulage Bhd and Eco World Develop pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.